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More Fitzsimon Follies

In yet another diatribe over at NC Policy Watch, Chris Fitzsimon continues his crusade to see to it that the government gets its hands on more of your money – this time you should be punished for selling your house via a transfer tax.

He attempts to discount part of the Realtors argument against the transfer tax: that the added expense of selling a home will slow home sales. According to Fitzsimon:

"the Realtors arguments simply don’t add up…seven counties in the state already have the right to impose the transfer tax, authority given to them in the 1980s by the General Assembly. One of them is Pasquotank County. County Manager Randy Keaton tells the N &O that the transfer tax has not slowed growth in his area at all. The county is one of the 20 fastest growing in the state."

Apparently, Fitzsimon and Keaton share the same crystal ball. If they come to the assumption that "the transfer tax has not slowed growth" at all, that means they must have some magical powers enabling them to know exactly what growth would have been without the transfer tax.

A timeless economic law is that when a certain behavior gets more expensive (in this case, selling a home) then there will be less of that behavior. Just because you don’t like it, you can not just wish away this economic law because it’s convenient to your argument.

Besides, Pasquotank County should be experiencing rapid growth…it’s on the ocean! Of course, when your county contains such a scarce resource as oceanfront property, the demand will rise rapidly. Not to mention the steady influx of military retirees from nearby naval bases flush with cash and looking to buy a place near the beach.

What really doesn’t add up is why Fitzsimon thinks he needs to use such an obviously misleading example in his argument.

Reader Interactions

Discussion

That’s not true. It could be that extra revenue from the transfer tax helped improve the schools and other facilities in those counties that caused even more people to move there.
Or similarly, maybe the county is experiencing tremendous growth because of its natural resources (like the ocean), but perhaps that growth would have been hampered by a decrepit school system that was saved by revenue from a transfer tax.
Either way, your economic law that as things get more expensive the behavior decreases, only works in a vacuum, and doesn’t account for the value of the product.

Justin,
Thanks for your comment and for reading our blog.
As for your comments – you really seem to be stretching reality here. Do you truly believe that a marginal amount of taxes generated from the transfer tax really improved schools so much as to account for such dramatic population growth? Besides,many of the homes in Pasquotank County are being purchased as seasonal homes or by retirees. Both of these groups will have no concern over the quality of the school buildings.
Secondly, you claim that economic law only works in a vacuum. This tells me you have not taken any economic courses. The science of economics was created to study human actions in a world full of scarce resources, trade-offs, opportunity costs, subjective value and of course the forces of supply and demand. The exact opposite of applying theory to a “vacuum.”

It’s going to come as quite a surprise to Pasquotank County residents to discover that Albermarle Sound has become the ocean. Apparently global warming has accelerated the rise of ocean levels faster than even Al Gore imagined.http://www.waywelivednc.com/maps/countymaps/maps/pasquotank.htm
“the Sound’s water is mostly fresh to brackish. Ocean water flowing through Oregon Inlet is quickly diluted by fresh water from rivers.”

Greg,
Thanks for the geography lesson, you get an A+ for nit-picking. I’m sure retirees and those looking for seasonal homes spend a lot of time scrutinizing whether their land is near a body of water technically classified as a “sound” or part of the ocean. I’m sure landowners just can’t bear the thought of living minutes from that “fresh to brackish” water (almost sounds kind of scary).
I’m somewhat amazed that you would go to such effort to post a comment – including a very colorful link – and manage to completely ignore the point of the original post.

Brian,
All my friends and I are planning a move to Pasquotank County. Haven’t you heard about all those wonderful gov’t schools? They’re so shiny. And the teachers have been trained in the NC curriculum! If you have kids, I suggest you get in fast.

Brian,
I have taken economics courses. I also have common sense. I know that when people buy homes they think about more than the price. They think about the location! Location includes things like quality of life, quality of schools, and natural features like sounds or oceans.
People might not be moving to Pasquotank because of their glorious school system, but you cannot deny that factors other than price are in play.
You mentioned it yourself… “scarce resources, trade-offs, opportunity costs, subjective value and of course the forces of supply and demand.” All of these come into play when discussing the purchase of homes in Pasquotank. You can’t define the behavior by a single variable, cost.

Justin,
Your original comment about economic laws only working in a vacuum is even more baffling with your claim that you have studied economics.
At any rate, I never implied that cost is the only factor in market behavior – hence the comment about the ocean. My main points were: 1)No one can truly know what growth really would have been without the transfer taxes (not even Fitzsimon or Keaton). So to claim that the transfer tax did not slow growth in any way is impossible to prove.
2) Fitzsimon’s example is a bit disingenuous because of both #1 and the fact that he must use a very unique county as an example for a tax he wants to impose on all counties.
Neither of these main points has been addressed in your comments thus far.

Yes…I know.
What do all of those counties have in common? Direct ocean access, and they are located near several naval bases with a steady flow of naval retirees (see original post)
Of course the NCACC applauds the transfer tax – it lines their pockets with more of our money.
I have trouble with an organization that uses our tax dollars to lobby the GA in order to get more of our tax dollars.
Additionally, one quote was curiously absent from their site. It’s a quote I included in one of my transfer tax pieces.
“The one issue we’re dealing with now is a lack of affordable housing. The extra one percent does have an effect on that,” said David Clawson, Dare County Finance Director.
I’m still waiting for a comment that addresses the main points of my original post.

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